Castle Homes and Development, Inc. v. City of Brier

• Decision Date: 22 August 1994
• Docket Number: No. 32243-5-I,32243-5-I
• Citation: 882 P.2d 1172,76 Wn.App. 95
• Parties: CASTLE HOMES AND DEVELOPMENT, INC., a Washington corporation, Appellant, v. THE CITY OF BRIER; and the Brier City Council, Respondents.
• Court: Washington Court of Appeals

Page 95

76 Wn.App. 95

882 P.2d 1172

CASTLE HOMES AND DEVELOPMENT, INC., a Washington corporation, Appellant, v. THE CITY OF BRIER; and the Brier City Council, Respondents.

No. 32243-5-I.

Court of Appeals of Washington Division 1.

Aug. 22, 1994.

Publication Ordered Oct. 28, 1994.

Timothy Laurence McMahan, Pt Townsend, for appellant.

Thomas Charles Evans, Seattle, for respondents.

GROSSE, Judge.

This case is an appeal from the trial court's determination that the decision of a special hearing examiner, as adopted by the Brier City Council (City Council) in Resolution 370, was not arbitrary, capricious, or unlawful, except as modified by the trial court. ¹ The City of Brier (City) cross-appeals part of the decision wherein the court held that both parties were prevailing parties, thus precluding an award of attorney fees and costs.

FACTS OF THE CASE

This case came about because of a proposed plat by Castle Homes and Development Inc. (Castle Homes), designated as Castle Crest II. It is a 28-lot development on 10.3 acres. The development is in the northwest quadrant of the City, and borders the city of Mountlake Terrace. In 1989, Castle Homes filed a preliminary plat with the City. At the time there were additional subdivisions approved or at various stages of approval in the northwest quadrant of the City which were before the City Council. Because of this rapid growth, the City retained engineers and transportation planner Donald Carr to advise it regarding traffic-related growth impacts. In the meantime, the City issued a determination of nonsignificance (DNS) for Castle Crest II on February 7, 1990.

Carr's traffic studies indicated there would be a substantial increase in traffic due to the cumulative effect of all these proposed subdivisions. The report also concluded that the roads in the City were substandard and would result in unsafe driving conditions.

Due in part to this study, the City withdrew its previous DNS for Castle Crest II on May 8, 1990. It issued a notice of probable environmental significance. On May 11, 1990, Castle Homes appealed the determination of significance. A hearing was scheduled for late June, 1990.

Carr issued a second traffic study regarding "Cumulative Traffic and Mitigation". This study used some of the documents produced by Castle Crest's expert, Terry Gibson, and Gibson Traffic Consultants. Carr's original estimate for a "Cadillac" street system in the northwest quadrant was approximately $10,000 per lot on a proportionate share basis. ²

Due to this high estimate, the City's Superintendent of Public Works requested that Carr revise the plan to a "bare bones" plan to ensure safe roadways. The second traffic report contained an estimate which calculated both "proportional share" and "fair share" impact mitigation fees that would offset the cumulative impact of development in the area. The "proportional share" was calculated at approximately $6,500 per lot, the "fair share" was calculated at approximately $962 per lot. ³ These figures came from a letter and cumulative traffic report dated June 22, 1990 from the traffic engineering firm of David Evans and Associates, Inc., engaged by the City to its Superintendent of Public Works. In the report the total estimated costs were broken down into proportional and fair shares. A revised version of this report dated June 26, 1990 was set forth later. This third report removed any "fair share" calculation. ⁴

On July 9, 1990, following the issuance of the revised traffic mitigation reports, Castle Homes and the City engaged in discussions to resolve potential issues related to the appeal of the determination of significance. There is much dispute as to what was said at the meeting, as indicated by the minutes of various City Council meetings. For purposes of the administrative appeal, these allegations were not reviewed by the hearing examiner or the judge. ⁵

On July 24, 1990, Castle Homes and the City entered into a stipulation to withdraw the appeal of the determination of significance because they agreed on mitigated impact fees. Later, on September 20, 1990, a concomitant agreement was signed by Castle Homes and the City resolving the issues of that appeal. These voluntary agreements granted preliminary approval of the Castle Crest II plat and included that impact mitigation for traffic purposes would be advanced by Castle Homes in an amount of $3,000 per lot at the time of final approval of Castle Crest II, or a total of $84,000. This $84,000 was to be reduced by a credit amount, originally an estimated $10,000, for street improvements bordering the Castle Crest II development benefiting the City but undertaken by Castle Homes off site of its development.

Section 9 of the executed concomitant agreement allowed only the City Council to modify or amend the agreement after approval. The same section of the concomitant agreement also included a provision regarding recovery of costs and attorneys fees should any issue go to court.

Some 9 months later at a June 25, 1991 City Council meeting, the City undertook review of the Castle Crest II project for final approval. At this meeting Castle Homes requested a revision or amendment of the concomitant agreement by the City Council. Specifically, the request was to reduce the traffic mitigation impact fees which were to be charged to Castle Homes at the time of final plat approval. ⁶

Although it did not have to do so, the City Council chose to approve the final plat, subject to an oral agreement to grant a hearing on the impact fees. On July 9, 1991, the City Council granted final approval of the plat by Resolution 360. The City Council and the developer agreed that Castle Homes would deposit the $3,000 per lot fee with the City, less a $10,000 credit for off-site traffic improvements with an additional understanding that the City would hold a public hearing. At this hearing factual evidence regarding the fairness of the dollar amount would be heard as to related costs and the fair share of developer contributions to the traffic impact fees.

At its August 13, 1991 meeting, the City Council adopted Resolution 361 which provided that the City would convene a public hearing to review the underlying factual support of the $3,000 per lot impact fee. It also provided that the City should present factual information supporting its claim that the $3,000 per lot fee represented a fair share of developer contributions to those traffic impacts directly related to the Castle Crest II project. The resolution also provided that if the factual evidence showed that the assessment exceeded development related impacts, the City would refund those amounts which did not reflect the fair share due from Castle Homes. ⁷

On January 9, 1992 a hearing was convened before a special hearing examiner. At the hearing, evidence was produced by traffic engineering experts representing both the City and the developer as well as argument from their attorneys. At this hearing it was discovered that many of the monetary impact fee figures in the City's various traffic studies were based on a 26-lot development rather than 28. However, the City's expert testified as to the cumulative effect of all of the developments in the area and the resulting charges on a proportional share basis. Castle Home's expert testified as to the limited amount of traffic impact from Castle Crest II as most of it would exit directly into Mountlake Terrace. At most, 25 percent of the traffic would enter the City's street system, with only 8 percent staying in the City for more than two blocks. When compared with the other new developments in the City, this amounted to a lesser amount than the other developments. ⁸

The expert for Castle Homes explained and presented evidence on the "fair share" approach to the impact fees. Although at one point the expert was talking about an approximate amount of $1,100 per lot, the "bottom line" of the evidence, using the City's own studies, was that a fair share payment for the direct traffic impacts onto the City's streets would be approximately $962 per lot.

Carr, the City's traffic expert, testified, "It's only because of the traffic increases, as [cumulative] effect of all these developments, I think that, you know, that I'm suggesting you need to consider, somehow, funding improvements to correct those deficiencies." Later, the City's expert admitted that the "fair share" direct result of additional traffic from Castle Crest II would be $42,000 from his first report, and $25,000 from the "bare bones" report. He went on to testify that the "proportional share" approach, as understood and used by the parties, was better suited to these development projects, because contributions would be received from the developer to correct the existing traffic problems in the City. ⁹ Carr also admitted that this "proportional share" approach does not represent any traffic distribution analysis.

About two-thirds of the way through the hearing, the special hearing examiner stated the following:

You know, I personally ... I've [got] some concerns as Hearing Examiner about the appropriateness of changing conditions on plat after the preliminary approval's been issued in the first instance. And if I were to go that line, I would just simply say, "It's inappropriate to consider changing that dollar amount period. The dollar amount was set with the preliminary plat and that's it. You either record it with that or you lose." The City Council hasn't taken that posture. I have been asked to conduct a Hearing for the purpose of telling the City Council whether or not the basis for the figure that was arrived at to begin with is factually sound, or something like that. I've lost track of the term right now. And I do not intend to get into anything other than that. I'm not going to get into whether or not the City even ought to be considering doing this, because it's not what they've asked me to hear...